Apparel Importer Wants Goods Appraised at Rate of Sale Between It and Canadian Parent Co.

CBP should have liquidated Accolade USA Inc.'s apparel imports at the transaction price between it and its Canadian parent company Accolade Group Inc. (AGI), Accolade USA argued in its Oct. 29 complaint at the Court of International Trade. The apparel imports qualify for the transaction value since the relationship between AGI and Accolade USA doesn't impact the price paid for the apparel and the sale is made on the terms that it's for exportation to the U.S., the complaint said.

Part of AGI's business involves importing apparel from "unrelated vendors in Asia and elsewhere" to Canada, where the company then embroiders the textiles. From there, AGI exports the freshly embroidered apparel to Accolade USA, where the U.S. subsidiary sells the merchandise to unrelated customers. Accolade USA's sales representatives set the suggested wholesale prices for the AGI merchandise, the complaint said. When the merchandise is sold from AGI to Accolade USA, AGI charges an "intercompany price based upon the Canadian price plus freight, embroidery or screen-printing costs, and a mark-up of 15%," the complaint said.

At liquidation, CBP appraised the merchandise at the values based on Accolade USA's resale value to the unrelated customers and not, as Accolade USA would've preferred, based on the rate between AGI and Accolade USA. The importer argues that its imports qualify to be appraised at the transaction value between AGI and Accolade USA. The sale of the merchandise between Accolade USA and the unrelated customers cannot be considered to be for exportation to the U.S., since those were only domestic transactions, the complaint said.

"On information and belief, CBP posited a fictitious sale of the merchandise 'for exportation to the United States' from AGI Canada to unrelated customers of Accolade USA," the importer added. "No such sale occurred, and there is no contractual or other privity between AGI and any of the customers of Accolade USA. The imported merchandise is properly subject to appraisement according to transaction value."